OSS Terms Toolkit Helps Buyers Assess Outsourcing Contracts

Everest Research Institute has created the OSS Terms Toolkit, which is a valuable instrument for buyers looking to outsource.  The OSS Terms Toolkit evaluates important aspects of the agreement, including contract termination.

An outsourcing deal is only as good as the contract.  A weak contract can lead to potential problems between the buyer and supplier.  To have a strong contract that protects both parties, it is crucial that the agreement is neither supplier-biased nor buyer-biased.  Everest Research Institute’s OSS Terms Toolkit helps in defining opportunities and balancing the positions between the two parties.

There are many factors that go into a strong outsourcing contract, such as the process, procedures, scope of service, performance expectations, dispute resolution, pricing and grounds for contract termination.  Even thought both parties may have the best intentions, sometimes the arrangement doesn’t go as agreed or planned, which is why contract termination is an essential component to the outsourcing contract.

Every contract should include several ways for the buyer and supplier to end the relationship.  IT managers should evaluate the timelines and cost of the contract termination provisions.  The contract termination stipulation should include the flexibility of extension of termination.  When an agreement discusses contract termination, it should also list the conditions for severing the relationship, such as change of control, convenience or force majeure.

Everest Research Institute’s Outsourcing Support Services (OSS) includes tools to help buyers save time and improve the results of the outsourcing deal.  The OSS Terms Toolkit focuses specifically on one of the most crucial elements of the outsourcing arrangement – the terms and conditions of the contract.  It includes a summary of key contract terms and conditions, a framework for scoring the relative bias associated with each term and gives suggestions for new positions to better balance interests within the agreement.

The OSS Terms Toolkit evaluates these essential factors and more.  The following terms and conditions are evaluated by the OSS Terms Toolkit:

• Service scope
• Service performance
• Contract termination
• Contract termination transition assistance
• Governance
• Rights of recourse
• Pricing
• Intellectual property

The valuable OSS Terms Toolkit is a multi-tabbed spreadsheet.  There is a separate worksheet for each of the terms and conditions sections. It gives buyers the ability to review the contract terms based on a rating scale from 0 to 5.  The person reviewing the contract can assign a weighted score for each term and condition, depending on the buyer’s needs.  Each rating includes a detailed description of the implications to both the buyer and supplier.  

As a further convenience for buyers looking to outsource, there are free-text fields, so that the reviewer can provide rating rationale and key observations.  The OSS Terms Toolkit even includes Everest Group’s recommendations on minimum ratings for each section of the contract and insights on typical supplier positions and buyers’ benefits.

Everest Research Institute not only offers tools for outsourcers, but also provides decision support, workshops and assess to valuable research to help buyers find success with their outsourced projects.  For more information contact Everest Research Institute at (214) 451-3110 or visit www.everestresearchinstitute.com.